Are you contemplating the sale of your house, Steve Ord here. The current landscape of mortgage rates might have you questioning the right move. Homeowners like you may be hesitating, concerned about taking on higher mortgage rates for their next home. If these thoughts are on your mind, it’s essential to recognize that while rates may be on the rise, home equity is on the upswing too. Here’s a comprehensive look at what you need to understand.

Understanding Home Equity

In the world of real estate, equity is your wealth built within your home. As Bank rate aptly puts it:

“Home equity is the portion of your home that you’ve paid off and own outright. It’s the difference between what the home is worth and how much is still owed on your mortgage. As your home’s value increases over the long term and you pay down the principal on the mortgage, your equity stake grows.”

To simplify, equity is the current value of your home minus your remaining mortgage balance.

Current Homeowner Equity Levels

Recently, your home equity has been growing more rapidly than you might think. To put this into perspective, CoreLogic reports:

“The average U.S. homeowner now boasts approximately $290,000 in equity.”

This remarkable growth in equity is a direct consequence of substantial home price increases in recent years. While the market is gradually stabilizing, demand for homes continues to outpace supply, leading to a resurgence in home prices.

As per the Federal Housing Finance Agency (FHFA), the Census, and ATTOM, nearly 68.7% of homeowners have either completely paid off their mortgages or possess at least 50% equity, as indicated in the chart below:

In essence, nearly 70% of homeowners currently enjoy a significant amount of equity.

Leveraging Equity for Enhanced Affordability

Amid today’s affordability challenges, your equity can be a game-changer when it comes to your next move. Once you sell your property, you can utilize the equity you’ve amassed in your existing home to facilitate your next purchase. Here’s how:

Embrace the All-Cash Buyer Advantage: If you’ve been in your current home for an extended period, you may have accumulated enough equity to purchase your new house without the need for a loan. In this scenario, you can sidestep concerns about borrowing money and navigating fluctuating mortgage rates, as highlighted by the National Association of Realtors (NAR):

“These all-cash home buyers are happily avoiding the higher mortgage interest rates…”

Amplify Your Down Payment: Your equity can serve as a substantial contribution towards your next down payment, potentially enabling you to make a more substantial upfront investment. This not only reduces the amount you need to borrow but can also lead to more favorable interest rate offers from lenders. Experian elaborates:

“Increasing your down payment lowers your principal loan amount and, consequently, your loan-to-value ratio, which could lead to a lower interest rate offer from your lender.”

In Conclusion

For those considering a move, the equity you’ve diligently built up can make an enormous difference, especially in today’s dynamic real estate market. To ascertain the extent of your home equity and explore tailored strategies for leveraging it toward your next property acquisition, don’t hesitate to reach out to me, Steve Ord, your trusted real estate agent. I’m here to provide expert guidance tailored to your unique situation. Let’s unlock your home equity potential together!